What is financial trading

Introduction

Here at Markets.Online, we pride ourselves on catering for the needs of all our traders; from the most experienced ones to beginners. In that spirit, our experts have crafted this tutorial, especially for beginners, who have only just started to dabble into the financial markets. The aim of this beginner’s coursework is to equip our traders with the skills they need to ensure a successful trading journey with us.

Throughout this course, you will learn the basics of financial trading, the meaning of the most common terms and expressions all traders should understand, as well as a specialised course on how to use our different trading platforms.

What is Financial Trading?

Financial trading can be an intimidating term for novices, but long story short, it is the buying and selling of financial instruments in order to make a profit! Financial instrument is the general term and can take many forms. The main financial instruments offered by most online brokers are:

  • Shares or Stocks
  • Forex
  • Commodities
  • Cryptocurrencies
Forex

Shares/Stocks

Shares are small units of ownership of publicly traded companies. Traders can buy and sell these shares and make a profit in the process

Forex

Forex

Forex is the collective name of global currencies, such as the British Pound, the US Dollar, the Euro, etc.

Commodities

Commodities

Commodities encompass raw materials and agricultural products such as crude oil, gold, corn, etc.

Cryptocurrencies

Cryptocurrencies

Cryptocurrencies or crypto as they are also known are a new form of digital money. Most popular ones are Bitcoins, Litecoins, Ethereum, etc.

How does Financial Trading Work

There are two main types of Financial Trading; traditional trading and online trading. Traditional trading is what most people think of when discussing the topic. It has been popularised by Hollywood movies like The Wolf of Wall Street and The Pursuit of Happyness. And as shown in these movies, traders buy and sell financial instruments in financial markets.

Financial Markets
Financial Markets

Trading the traditional way, traders buy and sell financial instruments in physical markets. And like all other markets, there are different markets for different financial instruments.

Stocks are traded in the US Stock Market, the London Stock Exchange, etc. They can also be bought and sold on the NASDAQ Stock Exchange which is an electronic system.

Traders can invest in Forex via investment banks and companies.

They can invest in commodities in different ways using traditional trading. They can visit physical Commodities Exchanges, that are found in different places around the world to buy or sell Commodities. They can also purchase stocks in companies whose business depends on commodities prices, buy mutual funds, index funds or exchange-traded funds (ETFs) that have an emphasis on commodities-related companies.

Online Financial Trading
Online Financial Trading

Advancement in technology has made financial trading easier and more accessible to the general public. Online Financial Trading or Online Trading as it is most commonly known, gives traders the possibility to invest in different Financial Instruments via the internet. With the clicks of a few buttons, they can instantly buy and sell stocks, forex, commodities and cryptocurrencies.

Brokers such as Markets.Online bridge the gap between the traders and the different Financial Markets and give them access to all Financial Instruments.